On Friday, the Union government asked Parliament for an additional expenditure of Rs 56,850 crore, almost certainly causing the fiscal deficit target to slip even further out of reach (See Page 3). Almost at the same time, the Union minister of state for finance, Namo Narain Meena, blamed the weak rupee for fuelling inflation.
What is clear is that the government does not believe in curbing expenditure and correcting prices, two linked issues in the matrix of inflation.
On the one hand, it blames a weak rupee for the higher landed price of oil, while on the other hand, it loses no time in reducing fuel prices, exacerbating the very issue that it needs to resolve.
While the price of crude oil is not in its control, the government can certainly correct the domestic price of oil and curb profligate expenditure. These measures will certainly help in cooling prices.